Sprint acquires Virgin
Mobile USA and shook up the future of its prepaid wireless strategy!
If you haven't already, you can review more
details about
this acquisition by visiting the Sprint
Buys Virgin Mobile
page. The strategic options that
follow were those that come immediately to mind
following the
announcement.
Of course, we now know what ultimately transpired with at
least
their short term strategy; however, I've decided to keep thisdiscussion
here as an interesting look at Sprint's strategic decisions.
The
updates in red reflect how things ultimately transpired for comparison!
1.
Keep Boost and Virgin operating completely independently

This
is the "do nothing" scenario. In other words, Sprint acquires
Virgin Mobile and continues with
the
existing brands and their respective roadmaps. If you believe
what the Sprint executives and analyst were saying, the brands appeal
to
completely different demographics (i.e. age, income, race, etc.), with
minimal overlap, then this strategy could have made sense, and simply
allows
Sprint to eliminate a massive competitor. I personally did
not
believe what they were saying. While the two
brands did initially target
different demographics, there's so much overlap in practice that
leaving things as
is would have been inefficient. In addition, Boost had spent
millions of dollars trying to broaden its appeal from urban to more
middle America
(i.e. where Virgin is!) with its Unwronged campaign and Danica Patrick
partnership.

Conclusion
-
Although I suspected things would remain this way for at least a year
following the
close of the deal, I guaranteed that this would not be
Sprint's go forward strategy.

Update -
So
over two years following the acquisition, this is essentially the
strategy Sprint took. I called this the lazy person's
strategy. Ok, that's not fair. The reality is that
they
spent a lot of time and money combining the back office systems
and processes for the two companies, and also folding the working staff
into the Sprint organization. However, from a branding
perspective,
they haven't done anything meaningful. In other words, Virgin
Mobile and Boost remain as they were from a customer perspective, only
being run by different people. From my inside sources, I
understand that this has been a disaster, which is why we didn't see
Virgin or Boost do anything really meaningful or interesting since the
acquisition. Boost's Shrinkage program was the only
notable
campaign.

Update - After
years of struggling, Sprint re-launched it as an iPhone only
brand; check out the details at Virgin
Mobile iPhones Only!

Boost
had been whiplashed from network to network over a number of years.
They started out on the Nextel iDEN network where most of
their
growth came from. Then we saw them move to CDMA with the
launch
of their first monthly unlimited planned dubbed UNLTD - Unlimited by
Boost (in 2007). However, just as that seemed to be taking
off,
they discontinued the program. Then, shortly after Sprint
brought
on its new CEO, Dan Hesse, we saw Boost launch its now famous $50
Monthly Unlimited plan. With all of the problems Boost had
with the
iDEN network (do you recall the text message delay issue?), the
question became would they
move back to CDMA to gain capacity and access to better
technology? If I
were running Boost, I'm
thinking that iDEN was a dead end technology with a weak handset
lineup,
and no highspeed data, and no technology roadmap to get there...yikes!

That
said, Sprint could have chosen to keep Boost on iDEN and continue with
Virgin as its CDMA play. This could have been a good
approach to
really
help with targeting different users with different features (ex. high
speed data versus walkie-talkie) and minimize overlap.
However,
this approach would almost certainly foreshadow the demise of Boost,
because eventually iDEN was foretasted to disappear as it had
no relevance
in the future of wireless technology. i.e. Boost needed to
move to
a different, non-iDEN technology or die! Harsh but true (in
my opinion).

Conclusion
- This
would only have occurred if Sprint acquires Virgin Mobile and decided
that the
Boost brand would
ultimately be phased out once iDEN became truly uncompetitive.
I didn't foresee this to be the short term decision, however,
the
long
term may have proved out to look something like this unless Boost
expanded its
CDMA offering quickly.

Update -Sprint
announced in 2012 that it was decommissioning its iDEN
network. The result was the migration to CDMA phone sales
only,
and ultimately discontinuing support of iDEN a couple of years later.

3.
Focus Virgin on PAYG & Boost on Monthly plans

If
you recall, in 2008 Boost saw severe declines in its business,
and analysts were predicting some pretty hard times ahead for the
carrier and brand. However, when they launched their $50
Monthly
Unlimited plan in early 2009, all of a sudden they became the
industry's sweetheart and favorite topic of conversation.
Meanwhile, Virgin
was continuing to bleed customers and market share, and after
going public it became known that in fact
they hadn't been making a profit for a long time, if ever!
So,
perhaps a reasonable strategy was to focus Boost on Monthly
Plans,
while keeping Virgin on PAYG, while also trying to grow its Prepaid
Broadband presence.

This would have certainly
helped to eliminate any
competition for customers between the two brands. However,
Sprint
would have wanted an easy and seamless way to move customers back and
forth as
their usage needs change. This would have proved to be
expensive
from
a
platform development perspective, not to mention technologically
impractical and unappealing given that customers would have needed to
buy a
new handset when
they switch between the brands (due to the different technologies; iDEN
vs. CDMA). More than likely, this would have
required that Boost offer their monthly service on CDMA, which, in my
opinion was the only play that kept Boost surviving.

Conclusion - This
is a reasonable approach, however, unlikely to be the go forward
strategy.Update - This
turned out to be correct in that it was NOT the strategy Sprint elected
to pursue.

4.
Dissolve Virgin into Boost

This strategy would have basically meant that
Sprint acquires Virgin Mobile and subsequently
eliminated the Virgin brand over time, and
continue with Boost as Sprint's prepaid brand. This was
arguably
logical given that Boost was doing well at the time, while Virgin was
not, at least from a profitability perspective.
However, given Sprint's investment in the Virgin brand, and
my
belief that Virgin's brand is much stronger overall, with a far wider
appeal
than the Boost brand, I thought this approach was borderline silly.
I
included it here only for completeness.

Conclusion - Never
going to happen!

Update - Obviously,
this didn't happened. In fact, Virgin was doing so poorly
that
they eliminated its Broadband2Go prepaid Internet program, as well as
the lower end payLo brand.

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